`85 Incentives Hurt Used Cars

Finance incentives offered by domestic auto makers may have caused a lull in the national used-car market, but the surge of late-model trade-ins is expected to pay dividends in coming months.

Despite the immediate impact of the seven-week manufacturer sales blitz, an Automotive News survey of prominent used-car dealers suggests they are expecting a better supply and improved sales when the dust has cleared.

The trade-ins, of course go to the new-car dealers, but they filter down to the independents through auctions. Also, many used-car dealers buy used cars directly from new-car dealers.

Some retailers of used cars and trucks say increased traffic in new-car showrooms has spilled over onto their lots. Many buyers spurred by the promise of lower finance rates apparently are still uncomfortable with new-car sticker prices.

But lower interest rates on new cars have caused more used-car dealers to lengthen financing terms. Forty-eight month contracts on one-year-old models are not unusual.

Late-model used-car sales are most affected by incentives. However, the overall popularity of standard-sized and luxury cars, which has been apparent since fuel prices stabilized two years ago, continues unchecked. The vanishing breeds of large, rear-wheel-drive domestic used models are being snapped up.

``The 7.7 (percent) rates naturally cut down on traffic on late models,`` said Vernon Ingram, a used-car dealer in Dover, Del., and a member of the National Independent Automobile Dealers Association executive committee. But Ingram said business was strong prior to the manufacturers` sales drive.

``The late models are soft right now because of the incentives,`` said Jim Massey, an independent dealer in Oklahoma City and immediate past president of NIADA. ``But it has been a good year, and I think it`ll stay that way.``

Buzz Crozier, who oversees used-car sales at Don Massey Cadillac, Plymouth, Mich., cited a soft market because of incentives. But he predicted that ``the used-car market will come back strong in another 25-30 days.``

``I think you`ll see banks lower the interest rates on used cars,`` he said.